Programmatic Advertising

You are not alone if you are wondering exactly what programmatic advertising is. This complex yet effective means of obtaining advertising space has been around for a few years helping businesses target more efficient spending. Whether it is banner ads on websites, mobile ads, or in-stream video, Magna Global has estimated that 50% of all advertising will be programmatic by 2019. The best understanding is gained by looking at a mass of definitions, weeding out the superfluous details, and keeping the clearest of explanations.

The algorithmic purchase and sale of advertising space in real time.

Automated bidding on advertising inventory in real time, for the opportunity to show an ad to a specific customer, in a specific content

The Display Trading council defines as: use of automation in buying and selling of media

Programmatic is buying digital advertising space automatically, with computers using data to decide which ads to buy and how much to pay for them. (Kenneth Kulbik, LinkedIn Programmatic)

Technology that uses automation to make online purchases that reach a targeted audience.

Process of using technology to buy and sell ad inventory through an automated and data-driven procedure.

Automatic placement of ads with a high targeting capability.

Technology that allows high speed, automatic trading of ad space, creative and performance data.

Here are some other terms you’ll run into as you research more about programmatic advertising and marketing:

Advertiser = buyer

Publisher = seller

DMP (Data Management Platform): collects and analyzes cookie data to inform ad purchasing decisions

DSP (Demand Side Platform): helps buyers manage all media buys on one platform

  • Facilitates buying ad space on the open market

  • Brand representatives or media agencies acting as brokers utilize to enter bids and buy ads.

SSP (Supply Side Platform): helps publishers sell available ad space

  • Helps websites manage unsold ad space

  • Determines the “winning bid”

 RTB: Real-time bidding (exactly what it says with incredibly quick processors handling the bidding)

Reserved inventory: ad space booked in a non-bidding manner

  • Allocated to a specific publisher for an agreed upon rate.

  • Can buy, in advance, a guaranteed number of impressions from publishers.

  • Also referred to as programmatic direct

Unreserved inventory: ad space sold via RTB

  • Also called remnant inventory

  • Open auctions

  • Exclusive auctions that are private marketplace deals by invitation only

  • Occasionally sold via preferred deals which are an agreed upon fixed rate

So programmatic involves the use of software to buy digital advertising versus the traditional practice of submitting requests for proposals, quotes, negotiations, etc. AI technology finds the placement and content that should result in the highest ROI from the target audience based on previous online behavioral characteristics. The process is extremely efficient – it takes only milliseconds to electronically auction off ad space. The software automates buying, placement and optimization of ads and can also automate the purchase and optimization of keywords.

The technology can target audiences over a variety of publishers to keep from too narrow of an approach that might occur when committing to a myriad of impressions with only one publisher. The computer learning components of the technology are used to continuously improve ad offerings by constantly gathering consumer data to inform future targeting.


As you probably gathered from the definitions above, there are two types of processes – real-time bidding (RTB) and non-RTB. For both, the ad exchange is the middleman that communicates to the DSPs and SSPs the available impressions, minimum pricing, etc. and allows them to interact to buy and sell digital media.

Advertisers are given the opportunity to show specific content to a specific audience versus showing the same content to all consumers. Through the utilization of smart technology, target audiences for the space are identified by demographics and geo-graphics, as well as what is projected to be the most impactful time of day, frequency, and platforms ads are to be shown on. Algorithms consider the context of the page in addition to user behavior data.

For non-RTB, the price is pre-agreed upon by both parties prior to ads going live. For RTB, advertisers to bid on the price for the remnant inventory being auctioned. As a website is loading, available ad space is shared out to DSPs via the SSPs and an electronic auction takes place in milliseconds to determine which brand will show its advertising.

Smart Insights offers the following:




Programmatic allows for more efficient spending as it utilizes data-based decisions to determine on which platform ads should appear, when they should appear, and to whom. Less money is lost on hit-or-miss campaigns. Advertisers also have the advantage of buying across publishers; no more contracts committing to a certain number of ads with a particular publisher.

Brands can also improve targeting and personalize more. Programmatic technology identifies content for each individual as well as which site to present it on and when it will be the most impactful. This approach provides a greater reach across multiple networks, channels, etc. And the technology can establish frequency caps so viewers only see an ad a pre-determined number of times.

Programmatic is more efficient for not only financial reasons but also for time when compared to employing a human touch as it uses data driven algorithms in real time to determine what it shows, to whom, and when. This allows humans to focus on optimization and improvement instead of labor intensive processes like negotiating.

Programmatic also allows for the tracking of metrics in real time for better optimization of ad campaigns. Ads can be monitored and changes can be made any time to quickly adjust content in response to real time data. As with other pieces of your marketing strategy, the capabilities of programmatic advertising are only an advantage if metrics are being analyzed and responded to.

There is a concern that a brand might show up on a site or page that doesn’t align with the company’s values or an ad is displayed on a page with extreme content. Protecting your brand is essential and you have options to be proactive towards this concern. You can have your ads run off a whitelist that contains approved sites for your ads but this can narrow your reach. Your advertising can also designate a black list of sites or categories of sites to be excluded from prospective places to run your ads.

This use of data and technology to make real-time decisions about advertising to whom, when, and how can be done with an in-house team but requires extensive understanding of the process and all of the technology involved to do it effectively. Programmatic requires a large investment of time and resources to make the most of it and doesn’t necessarily work for every brand. To learn more about marketing opportunities that will take your business to the next level, contact the experts at Strategy Driven Marketing.